Vista Mortgage Group Blog

I'm sorry to say that knowing when to lock the absolute lowest mortgage rate, is something like knowing the precise location where the next meteor will hit Earth!

With mortgage rates as low as they have been over the past year and especially over the past few weeks, many homeowners are able to take advantage of the savings through a refinance (and yes, we still have potential loan options that will finance a property that is under water). 

 Deciding when to lock your rate, is a combination of comfort level (are you willing to take the risk of "waiting to see" if rates improve....or not), value (are you happy with the savings and the new proposed payment) and educated guess.

Locking your rate is a committment on your part, to the lender, that you intend to close your loan.  In return, the lender is securing those funds, at the locked rate, on your behalf.

Once locked, market rates may go down and some lenders allow for a "float down" option on a locked rate; which means that if the market improves dramatically (usually by a minimum of .750%), they will allow your rate to drop (possibly by .250%).  A "float down" option sounds great, but typically only happens when there is a significant improvement in rates and the lender is taking the greatest benefit from that improvement.

Unfortunately, the greatest change in mortgage rates (in terms of any dramatic/rapid change) only comes from devastating economic news or acts of war; which we hope does not occur. 

Just know, that a typical cycle for mortgage rates is a rapid and sustained rise followed by painfully slow declines.  In my opinion, if you are happy with a rate and your savings, it is better to lock (and then forget about it) than to endure the possible stress of the roller coaster ride called "wait and see."